Correlation Between National Reinsurance and DL Industries
Can any of the company-specific risk be diversified away by investing in both National Reinsurance and DL Industries at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining National Reinsurance and DL Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between National Reinsurance and DL Industries, you can compare the effects of market volatilities on National Reinsurance and DL Industries and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in National Reinsurance with a short position of DL Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Reinsurance and DL Industries.
Diversification Opportunities for National Reinsurance and DL Industries
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between National and DNL is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding National Reinsurance and DL Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DL Industries and National Reinsurance is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on National Reinsurance are associated (or correlated) with DL Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DL Industries has no effect on the direction of National Reinsurance i.e., National Reinsurance and DL Industries go up and down completely randomly.
Pair Corralation between National Reinsurance and DL Industries
Assuming the 90 days trading horizon National Reinsurance is expected to under-perform the DL Industries. In addition to that, National Reinsurance is 4.81 times more volatile than DL Industries. It trades about -0.08 of its total potential returns per unit of risk. DL Industries is currently generating about -0.13 per unit of volatility. If you would invest 652.00 in DL Industries on October 26, 2024 and sell it today you would lose (52.00) from holding DL Industries or give up 7.98% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 94.92% |
| Values | Daily Returns |
National Reinsurance vs. DL Industries
Performance |
| Timeline |
| National Reinsurance |
| DL Industries |
National Reinsurance and DL Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Reinsurance and DL Industries
The main advantage of trading using opposite National Reinsurance and DL Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Reinsurance position performs unexpectedly, DL Industries can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in DL Industries will offset losses from the drop in DL Industries' long position.| National Reinsurance vs. Manila Mining Corp | National Reinsurance vs. Atlas Consolidated Mining | National Reinsurance vs. Transpacific Broadband Group | National Reinsurance vs. House of Investments |
| DL Industries vs. Manila Mining Corp | DL Industries vs. Philex Mining Corp | DL Industries vs. Apex Mining Co | DL Industries vs. Top Frontier Investment |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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